KUALA LUMPUR, Dec 11 - Our final estimate on CPO production shows anupward revision of 10,000 tonnes to 1.045 million tonnes. This representsa month-on-month decline of 95,000 tonnes or 8.4 percent. The upwardrevision reflected a much smaller than expected decline of around twopercent or less than 10,000 tonnes in East Malaysia. This compares with anestimated decline fo 12.5 percent in Peninsular Malaysia.Additionally, the oil extraction rate (OER) was somewhat better. Thiswas most evident in Sabah. Total production for the first 11 monthsamounted to 10.83 million tonnes. There is a fairly good chance the wholeof this year's output will reach 11.7 million tonnes. This would be860,000 tonnes or 7.9 percent higher than last year.Reflecting the upward revision in production, the final estimate onend-November stocks of palm oil is revised to 1.31 million tonnes. This is30,000 tonnes lower than a month earlier. This level of stocks is deemedmanageable, particularly as it marks the reversal of a rising trend with asubstantial drawdown expected at the end of this month. In contrast and inline with our projections, stocks of PKO maintained their uptrend andreached an all-time new record high of an estimated 370,000 tonnes or some15,000 tonnes more than October.Stocks had built up to this burdensome level following anunprecedented period of accumulation starting from March last year whenstocks amounted to 107,900 tonnes. We view the PKO stocks situation asworrysome although it may not be a matter of great concern to PK producersand crushers in terms of absolute prices and margins. It cannot be deniedthat anaemic export performance was the main cause of the stocks buildup.PKO exports in September-October fell to 82,500 tonnes from 111,000tonnes a year ago. This is not surprising given that domestic offtake ofPKO has reached saturation level. Offtake by the oleochemical sector inJanuary-September amounted to 606,000 tonnes or unchanged from the sameperiod last year. In the local market PKO price had been traded atincreasing discount to CPO - from an average of 10-23 ringgit in Octoberto 30-45 ringgit in November and 75 ringgit last week. Production of PKdropped 11 percent to around 288,000 tonnes in November.CPO futures price meanwhile displayed a whip-saw pattern in the pastthree weeks. The February contract gained 85 ringgit in the week endedNovember 23 but lost practically all of it the following week. Last weekit rebounded 72 ringgit to settle at 1,169 ringgit after posting anintraday high of ,1200 ringgit on Friday. The gains would have been muchmore had the market not reacted bearishly to India's raising of the tariffvalues on palm oil on Friday afternoon.The December 7 announcement of new tariff values came eight days afteran official from the Finance Ministry denied to a wire service thatchanges were forth coming. Speculation and rumours of a revision were notunexpected considering the last revision on October 9 was made somenine-and-the-half weeks after the introduction of tariff values on palmoil on August 3.The latest values (previous in brackets) in US$/MT are: CPO 314 (286),RBDPO 341 (295), RBD OLN 349 (307) and Crude OLN 334 (298). As we had saidpreviously, Indian authorities shoud avoid generating market uncertaintiesand confusion. It is left to be seen whether the Central Board of Exiseand Customs has settled down to reviewing and revising tariff values on afixed periodic basis. The market is also keen to know the base period usedin determining the values. Perhaps it is too much to expect tranparencyand good governance. The latest tariff values raise the import dutiespayable by $18.20 (for CPO) to $42.50 (for RBD PO).